In almost all events that have an elimination style narrowing of the field or a process of selection of a limited number of participants from a larger pool of participants based on prior performance (e.g., sports competitions), there are a number of problems faced by supporters:                Inability to purchase desired attendance rights in advance: For playoff type events, fans would like to purchase tickets at the start of the season, but since the outcome is uncertain, the authorized ticketing authorities (e.g., team owners) do not offer these tickets until continuation in the tournament is guaranteed (e.g., end of the regular season). Therefore, there is long lead time between when individuals would like to purchase tickets to these subsequent competitions and when such tickets are usually offered.        Requirements to purchase unwanted tickets, merely to guarantee attendance at a particular event of interest: For tournament type events, fans typically have to commit to buying tickets without being sure who the actual competitors would be, with the possibility of the two participants being competitors that the fan has no desire to watch.        Reliance on “scalpers” and other unreliable sources: As the information on who will participate in future rounds evolves, an individual may find that it is more difficult to obtain tickets to these future rounds. Some preference may be given to season ticket holders, but there is normally a long wait list and a greater financial cost to become a recipient of a season ticket. Therefore, individuals are often forced to purchase such tickets through “scalpers,” “ticket brokers” or other unsavory characters or risk not obtaining such tickets at all.        Inability to actively manage “ticket availability” risk: For fans willing to absorb the risk of their options never vesting, there is also potentially an advantage to purchasing an “option” to the ticket early on when such uncertainty is great vis-à-vis waiting until there is absolute certainty about the competitor's participation in the chosen event/game. Such “option” could potentially be offered to them at lower cost (i.e., “discounted” in accordance with the probability that the competitor will not qualify for the event). Currently, fans have to wait for the outcome to be finally decided and they risk either not getting a ticket allocation or having to pay a significant premium to scalpers.        Lack of a secondary market: Currently, there is no official secondary market for post-season tickets, so that if individuals cannot attend such events, they are left with the problem of disposing of such tickets themselves.        
Moreover, in addition to creating various problems for fans, the current method for selling and distributing elimination- or competition-based attendance rights is not particularly well-suited to the interests of owners/organizers either. Among the problems faced by the event organizers/team owners are:                Absence of an efficient market clearing mechanism: Fan interest in attending these higher round competitions varies depending upon the competitors—i.e., they would want to attend if their favorite competitors advance, but would not necessarily care if their preferred competitors are eliminated. Typically, however, when sporting events reach the point where such fan interest is at a peak (when a team has qualified for the playoffs or the final match-up of a tennis tournament is set), there is a substantial imbalance between the supply of tickets for the games (which is fixed) and the demand for these tickets. Since prices tend to be fixed (by the teams or tournament organizers), there is no efficient market clearing mechanism and tickets are sold on a first-come/first-served basis. There is a considerable unmet demand at this point that is never satisfied by the event organizer and hence goes to waste.        Revenue lost to unexploited demand: As explained above, team owners/event organizers are not maximizing their revenues. Currently, only teams that qualify for post-season play make revenues from such ticket sales. To illustrate this point, in a tournament with 64 players, the organizers can allocate 5,000 seats (or 2,500 seats per optioned contestant) for the final match to options holders. If there were sufficient demand for each of the contestants, the organizers could sell up to 160,000 options on all the contestants, and only 5,0000 of these options will vest. Similarly, in team sports with a playoff style elimination, all teams can issue such options and get some revenue, where currently, no such opportunity exists. In this way, the organizers have captured all the demand available (thereby maximizing revenues), fans have been able to match their needs to the financial cost of satisfying the need, and the event is attended by fans most interested in the event, because the options allow such matching.        Risk that “popular” teams/competitors will be eliminated in early rounds: Under the current system, team owner/event organizers may face financial difficulties if, for example, the qualifying competitors are not popular, or if all the “favorites” are eliminated in the early rounds of competition. In these instances, there may be very little fan interest in the later round(s) of competition—and expected revenues from these rounds may never, in fact, materialize.        Unpredictable revenues, based on performance: Under the current system, team owners (and event organizers) have little, if any, ability to hedge against the risk of poor performance or “upsets”—which may substantially diminish fan interest in the event.        
Generally speaking, options represent the right to acquire or dispose a specified asset at a predetermined price within a defined time period. The predetermined price is referred to as the “strike price” and the date on which the option ceases to be effective is called its maturity/expiration date. These parameters, along with the current market value of the underlying asset, largely determine the value of the option. Other factors in the valuation are the volatility of the value of the underlying asset (a measure of the probability that the current value will be favorable vis-à-vis the strike price) and the interest rate (to quantify the carrying cost or the cost of financing the purchase). For a detailed discussion on options, see John Hull “Options, Futures and Other Derivative Securities,” Prentice Hall—Chapter 7.
Alternative forms of options have included those that provide a pre-specified payoff when an event occurs during a defined time period. These latter type of options are more in the nature of an insurance policy type of application than a true option. See, e.g., U.S. Pat. No. 4,766,539. [Examples of these are options on bonds that can be purchased by the owner of the option from the seller of the option, at a pre-specified price, should an earthquake occur in a specified area during a specified period of time.]
Options have been used for hedging the risk of changes in the value of the underlying asset or occurrence of event, or for investment and speculation. The option seller, who is willing to make this commitment to the option purchaser, receives the proceeds from the sale of the option and is better off for having been able to sell such rights. Computerized methods for trading traditional futures/options have existed for many years. See, e.g., U.S. Pat. No. 4,903,201, incorporated herein by reference. There have been other applications of options-type instruments beyond financial instruments and commodities, such as options to purchase airline tickets. See, e.g., U.S. Pat. No. 5,797,127, incorporated herein by reference. And, there are currently computer systems that manage the sale and issue of tickets to a variety of events and under various sale conditions, like refundable and non-refundable, fixed terms and changeable terms, and so on. See, e.g., U.S. Pat. Nos. 5,598,477 and 5,953,705, incorporated herein by reference.
However, despite the widespread use of “options” in the prior art, applicant is unaware of any previous use of marketable “options” to assign/distribute attendance rights to tournament- or elimination-style sporting events, especially where vesting of the “optioned” attendance right depends on the final selection of participant(s) in the event in question. Nor is applicant aware of any secondary market for such “options.” Thus, at present, significant problems and inefficiencies exist in the selling/distribution of post-season and tournament attendance rights, and there remains a significant need for improved methods, apparatus and articles-of-manufacture to facilitate efficient sale/distribution of such attendance rights.